Urea up $200 a ton in Ohio

Talk about sticker shock. When farmers go to buy fertilizer they may be taken aback by the price of urea that has jumped upwards of $200 per ton since February.

“You have farmers that were very slow to commit to their needs for the upcoming season,” said Phil Altstaetter, Crop Nutrient Manager for Trupointe.

Two or three years ago, people owned fertilizer positions and farmers said we aren’t going to buy. People like Altstaetter held those positions as they devalued tremendously in 2008 and 2009 and then they took smaller positions than traditionally. Now, when farmers are ready to buy there are fewer tons available.

Also, he says the values were too low over the winter. That sent nitrogen to markets outside the U.S. Then in February, concern over having enough nitrogen for all the corn acres foretasted drove bids higher to get imports to the U.S.

This doesn’t mean there’s a shortage.

“Farmers will pay a premium to get the product in place as timely as they want it,” Altstaetter said. “It’s just a matter of how far will we have to haul it and could there be a longer than normal wait time until the product in place.”

The early spring magnifies the problem.

“It’s throwing gas on the fire,” Altstaetter said.

Urea is the most expensive form of nitrogen today. So the first thing that could happen is growers switch to ammonia or 28% UAN.

“I expect UAN to react and move up as the urea market has and its starting to happen now,” Altstaetter said.

He says farmers need to watch how much corn the U.S. plans to plant this year, because its going to demand a boatload of nitrogen. At the end of the growing season last year the system was empty of nitrogen.

“Now we want to plant a huge corn crop and we are starting with empty tanks and bins,” Altstaetter said.

Altstaetter believes that if nitrogen prices get too high, Ohio farmers may easily switch to beans.

So when can we expect the price to come down?

“June,” Altstaetter said. “Basically it will be too late for this growing season for most Ohio farmers.”